Canada National Election - With Inflation at a High, Harper Says No Troubles

The pocketbook issues that have been tormenting Canadian consumers in recent months were expected to confront federal leaders on the campaign trail Tuesday as inflation hit its highest level in more than five years.

Statistics Canada reported the rate of increase in the cost of living rose in August to 3.5 per cent on an annual basis from 3.4 per cent in July, fuelled in large part by higher fuel prices.

Speaking at a campaign event in Quebec City, Layton said his party would introduce income averaging for artists, as is already common practice in Quebec, while also providing an annual tax exemption of $20,000 for income earned by copyright and residuals.

"One of the key things we must do, before we start giving $50-billion tax giveaways to banks and oil companies, is to protect and promote the arts," Layton said.

Liberal Leader Stéphane Dion flatly rejected forming a coalition government with the New Democrats today on the heels of hints from NDP Leader Jack Layton that he'd be open to the idea.

Mr. Dion, speaking after an address to a Vancouver-area business crowd today, said he could not work with Mr. Layton in this way because the NDP leader wants to hike taxes on business.